Shares of Amazon.com (AMZN) are up 8 cents, at $314.21, after the company announced new models of its "Kindle Fire" line of tablet computers. The new models, a 7-inch and an 8.9-inch version of the "Fire HDX," with a beefed-up processor and memory, battery life, and screen display, for $229 and $379; and a simpler model, the existing Fire HD, with some improved specs, for $139, less than the original $199 price. Note that those prices are for 16-gigabyte storage configurations, and they assume the user is willing to look at ads, or "special offers," as Amazon terms them. Removing the ads bumps up the price of the 7-inch HDX to $244.

The models become available starting October 2nd for the HD, and October 18th and November 7th for the smaller and larger models of the HDX, respectively. Amazon said it has added some new features, such as a "Mayday Button," in the HDX, which connects the user to free 24/7 technical support.

Amazon also touts a new release of its adaptation of Google's (GOOG) Android operating system, the "Fire OS." It offers the ability to run any Android application, the company says.

The HDX will be available in models that include 4G cellular data connections, for $329 and $479, respectively.

RBC Capital's Mark Mahaney, who has an Outperform rating on the shares, is positive on the new models, pointing out that they lead to follow-on media sales, which, combined with hardware, is becoming a very large part of Amazon's revenue:

We view the new Kindle Fire HDX product launch and the Kindle Fire HD product refresh to be rational steps for Amazon, as new lower priced introductory options and increased functionality open the Kindle family up to a wider audience. These steps also are in sync with Amazon's strategy to sell devices at close-to-cost prices, generating significant profits off of incremental media – and other – segment sales via the devices. As one supporting dpoint, Kindle buyers purchase 4x the amount of books from Amazon (physical and digital) after buying a Kindle. The Kindle has become powerful enough as a book selling channel to help enable to best-selling book of all time (and we don't mean Harry Potter) to achieve that status in such a short time. Although there is no disclosure, we would estimate that Amazon is also seeing a 1x to 2x increase in music and video unit sales per Kindle Fire purchaser. All in, we believe that Kindle Ecosystem sales are contributing more than 10% of AMZN's total revenue.

Topeka Capital Markets's Victor Anthony is even more bullish than Mahaney, writing that "we believe the specs and features offer a compelling economical alternative to iPads," and noting that the the 7-inch HDX in 16-gigabyte capacity "undercuts the iPad Mini by $100."

"Amazon is well on its way to effectively replicate Apple's (AAPL) business model," he declares.

Anthony goes through what he views as the "new cool features" of the devices:

(1) Amazon provides on-screen live video tech support with the Mayday feature that can co-pilot the user through any feature by drawing on the screen. The user can see the tech support person but the tech support person cannot see the user; (2) wirelessly beam or cast content on the Kindle HDX device to a TV using a certified Miracast-enabled accessory or TV. Hopefully this will be available on Google's Chromecast. There is also a Second Screen app that turns the user's TV into the primary screen, freeing the Kindle Fire for other functions while the user watches a movie. Second Screen will be available starting in October for PlayStation 3 and Samsung TVs, and later this year for PlayStation 4; (3) users can download Prime Instant Video movies and TV shows to their device, the only online video service in the U.S. that allows this. Way cool; (4) a built in Office suite for word, Excel files (5) Goodreads integration - see what friends are reading, rate books, etc.

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